Techno-economic optimization of services stacking for a battery participating to electricity spot markets

This study explores the optimization of services stacking for a battery providing primary, secondary, and tertiary frequency regulation while participating in the day-ahead market in Italy. Formulated as a two-stage stochastic Mixed Integer Linear Programming (MILP) problem, the objective is to maximize daily revenues accounting for uncertainty related to tertiary reserve offers acceptance. The paper investigates how technical and financial market design parameters impact battery's revenues and optimal strategy. Key findings indicate that the highest economic gains are associated with batteries having intermediate Energy-to-Power Ratio (EPR): too high EPR increase the investment risk, and very low EPR are optimal only under specific market conditions. The study highlights the need for proper balancing capacity payments to incentivize batteries participation to flexibility markets. The market value of diverse services also drives investments choices in terms of batteries' design, specifically influencing the EPR value.